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Our home is currently in the first stages of foreclosure - our credit is ruined and we cannot refinance. The mortgage company has denied our financial hardship application. What can we do? Is there a specific timeline here?
John and Marie D., NMThe most important thing you can do is stay in constant contact with your mortgage lender. There are possible alternatives you can try, and you should exhaust all means to prevent this from happening. You could try: Special Forebearance where lenders are willing to reduce or suspend payments for a short period of time, a Repayment plan, where a lender allows you to make payments over a period of time which includes current amount due and a portion of the amount in default until the debt is paid.
What First Time Homebuyer programs might be available for me and my wife?
Vince S., Boca Raton, FLCheck with your mortgage lender. Most First-Time homebuyer programs are administered at the state, country or local level. FHA programs offer lower downpayment options which are often attractive for first time homebuyers. A great place to start is the HUD website (Housing and Urban Development).
But do your homework in advance and compare your alternatives. Some first time homebuyer programs have restrictions as to the value of the property or the amount borrowed. The house typically must pass some sort of inspection and usually must also be your primary residence and not a rental property. Compare any special program with a typical conventional mortgage program to weigh the pros and cons before any decision.
My parents are both aging and thinking of moving into retirement homes - their current home is paid off. Would it be more beneficial for me to out right sell the property or have them do a reverse mortgage?
Tracy, WVIn this situation, with your parents leaving the property, it would be best to sell the home and divide the profits accordingly. With any mortgage there are fees associated with borrowing money which would be subtracted from the profits as well as the normal monthly fees (taxes and insurance) which must continued to be paid as long as your parents reside in the home. If your parents were going to continue to live in the property, it might be something to consider but do careful research prior to any decision.
What is a "GFE" and do I really need it?
Lee, Riverside, CAWhen a mortgage lender refers to a "GFE" they are speaking about a Good Faith Estimate. RESPA (Real Estate Settlement Procedures Act) requires that a mortgage lender or broker provide a consumer with a Good Faith Estimate prior to settlement.
The Good Faith Estimate includes an accurate and itemized list of fees, costs and rates associated with the mortgage quote given (also known as closing costs or settlement costs). Some of the standard fees you will see on the GFE include, taxes, title insurance, home inspection, appraisal fees, and processing fees. Some of these fees are relatively standard in the industry, some vary greatly from institution to institution.
It is highly recommended that any consumer who is shopping for a mortgage loan get multiple GFE's in order to compare costs between lenders. But remember a Good Faith Estimate is exactly that, an estimate and the final numbers you see at closing might be different based upon a number of factors (credit scores, LTV ratios, appraised value of the property, etc.).
Afer i locked in a rate with a mortgage company with a 60 days limit, can I unlock the interest rate after the rates have gone down.
DennisIt all depends on that particular mortgage lenders policy. Some mortgage institutions offer a renegotiation to the original rate and some do not. It is best to discuss this issue with them up front.
I live in Houston, TX and I have a second home that I just pulled off the market after trying to sell for a year and leased it. How long will I need to wait before refinancing? Is this state specific?
Christine, Houston, TXHi Christine,
The rules are 'lender specific' meaning different banks and lenders have different rules/policies for this. It isn't state specific though. If you are looking to lower your rate and not take any cash out then you need only to wait 30 days from 'de-listing' your home. If you are taking out cash, then you'll need to wait 60-90 days before you can refinance your mortgage, depending on the bank that you go to.
How come, with the Fed rates so low, is there no trickle down effect to mortgage rates? It seems to me that with the current housing crisis there should be some mandate to bring the mortgage rates down so that people can refinance into fixed rate loans. I understand that mortgage rates used to be tied to the 10 year T-note and the Fed rate, but this doesn't appear to be true any longer. What is going on?
Unknown - ORThe Fed lowers short term interest rates and not 1st mortgage rates. It is how the bond and stock market react to these changes as well as the overall economy. Mandating lower mortgage rates would wreak havoc on our economy. The market has to have some level of self-governing or there would be no one in it. Recently, the 30-yr. mortgage backed securities have had a much greater influence over rates then the 10-yr. T-Bill.
I have a good credit score (700) and my spouse doesn't (579). My spouse earns more than I do in regards to salary, so we need to apply jointly for a mortage loan. Will this affect us getting a loan?
JohnWhen getting a motgage the lender goes off the lowest "middle" score of the 2 borrowers. So if you need to use your wifes income then the lender would use the lower of the 2 middle scores in making their credit decision. If you want to use just your scores, then your wife could not use HER income for qualifying, however she could still be on the deed.
We are thinking about buying a rental house next door to us. It is an older home but has been remodeled several time. We have about $50,000 dollars saved, half of the money is in a short term CD at 4.65%, half in a savings account at 2.34%. Should we pay all as a down payment? The house is selling for $70,000, and it can be rented. Or should we pay 20% down and finance the rest?
Donna - INYour best bet might be to use the money in the low interest savings account and put 25% on the property to get the best pricing/rates and keep the CD for now.
As a rental, you will want to have a mortgage to offset any income and lower your taxable gains from a tax point-of-view.
I live in...Massachusetts. My house has been for sale for 14 months. The current interest rate is low enough to think about refinancing. A mortgage company said I can not refinance to take this benefit because my house has been on the MLS. Is this true?
Effie - MAGenerally, if you are not taking cash out, you can refinance as long as the listing has been cancelled and expired for 30 days. If you are taking cash out, you'll need to wait 90 days. Whether you feel it is in your best interest to cancel the "for sale" listing and refinancing, or keeping the house on the market is something you need to decide and talk over with your Realtor.
We wish you the best of luck either way!
I refinanced at a higher rate 6 months ago with...taking out some $ to pay off my Credit Card debt, and repair my credit, with refinancing in mind for 6 months, which is now. Now in order to refinance with them I need to come up with 12,000 -15,000 since the market has gone down and my house may not be worth the same amount as it was 6 months ago. Does this sound right to you??
GwenHello Gwen,
I'm assuming that you refinanced your 1st mortgage and didn't take out a 2nd mortgage. It does sound possible that your home has gone down in value over the last 6 months. Various parts of the country are experiencing a drop in home values. You may want to look at either an FHA loan which will allow you to mortgage a larger percentage of your homes value, or going to another bank other then Chase to see if they don't require the $12,000 outlay.
Can you get a lower rate for a home loan in another state that may be lower than the one's in your own state with good credit?
Lee - Unknown StateFor the most part, yes. Pricing is often regionalized. Certain states are more attractive for a bank to lend in. This works like car insurance in that there is more profit for a company and they therefore charge a lower premium.
What are the major factors to consider in trying to determine which way interest rates are likely to trend?
Lisa - NYThat is a great question, however, it is not one easily answered. There are innumerable factors that go into what the current mortgage rates are at. Personally, I always try to keep an eye on the 10-year Treasury bond. It is probably the best indicator of where rates have been and where they are headed. There are a variety of sites that keep you up-to-date on the current Bond prices and yields that might be able to help you in speculate which way the rates are going to trend. Also, our Daily Mortgage Commentary will often drop hints on which way the market may be headed.
What lenders offer 3% or 5% down instead of...20%?
Carol - ArizonaAlmost all lenders will do loans at 3% or 5% down payments as long as there is sufficient equity in the property to do so. If you are looking to purchase a home, down payments less than 20% will result in the addition of Private Mortgage Insurance (PMI). However, sometimes there are ways to avoid PMI. Contact the lenders directly for a more detailed explanation that is suitable for your exact situation.
Right now I owe 10 years on my house and would like to remodel. Would refinancing at this point in the loan be good? If I take a cash out loan will my interest rate go up? I would like to take it back to 15 years and borrow enough for the remodel.
Jack - ALIt all depends on your current mortgage rate. However, depending upon your current interest rate, you might be better off refinancing your existing mortgage and take cash out. That is as long as the interest rate is comparable to your existing interest rate. However, if the present value of your home is high enough and you have a rather high current mortgage rate, it might be in your best interests to get a home equity line of credit. In many cases, home equity line of credit rates are often a little above the current prime rate.
What does "3/1" mean in an ARM mortgage?
Haley - ConnecticutSimply put the 3 in the 3/1 ARM (Adjustable Rate Mortgage) means that the rate stays fixed for the first 3 years of the life of the loan. During the 4th year and the rate will adjust. To what rate the mortgage will adjust to in the 4th year varies by market conditions, and what the margin and caps are. Be sure to ask your lending institution what the margin, periodic caps, and life cap is on your ARM.
Check out our Mortgage Financing section located in our Learning Center for more information on Adjustable Rate Mortgages.
I am purchasing a residence and will be taking a fixed rate 30 year mortgage. How do I decide when to lock my rate, and what should I be asking the lender when I contact them?
CaryKnowing the exact time to lock in a rate is very difficult. Although we are looking to get that lowest possible rate, rates can change at a moments notice. One minute you could lock in at a really low rate, and the next minute it could either drop or rise significantly.
Some lenders offer what is called a "float down" which allows you to lock in a lower rate if rates drop from the time you locked in your initial rate. Generally, lenders who offer this service allow you to only float your rate down once. Be warned that these float downs sometimes come with a fee attached, so ask your lender if they offer a free float down once your rate is locked.
How can I get a rate quote without doing my credit report? Seems everyone wants to do an inquiry...
John - TexasWell John that is a tough one. The reason the mortgage companies want your information is that they want your business. They are accustomed to people calling up and asking for quotes and doing one of two things. Either the consumer calls up wanting a quote and hangs up shortly after getting the information they are seeking never to call again, or the lender is used to consumers calling up saying my credit score is one thing, getting the rate and wanting to lock in, when it turns out that their credit score is quite a bit lower or their credit is light. In the end, can you blame them for wanting your information?
Tell them you'd like a quote that you will not hold them to if your score is below 685, but that you will hold them to if it is. If you keep trying- you'll get your quote. Or better yet, go to one of the credit reporting agencies and pull your own credit, keep a copy and provide it to any of the mortgage lenders with whom you might be working. That way the credit report is only pulled once and you will not be penalized for multiple credit report pulls which often happens.
We are contemplating a Reverse Mortgage, Fixed Rate...appraisal HECM. What are the interest rates and are they going to change...higher or lower??...
Lal - FloridaPredicting where interest rates are headed is not something we do. It’s a little like predicting the weather, we can guess, but it might not turn out exactly the way you had predicted. Also, rates will vary from lender to lender.
However, there is a great site you should visit that was set up so that seniors would not be taken advantage of when contemplating a Reverse Mortgage. The web site is www.reversemortgage.org. You can also find a list of lenders on that site that can give you a current rate on your property. Like any mortgage, you should contact and compare the different companies. Even with Reverse Mortgages, you may find that different companies may be able to offer different deals.
What type of mortgages are available to me? I am three to four years post bankruptcy, have [an] auto loan for the past two years to re-establish credit. Fair credit...
Jill - WyomingObtaining that auto loan was definitely a great step in re-establishing your credit. Lenders go by the date of your discharge from bankruptcy. If you are 3 to 4 years post discharge, and have re-established credit with an auto loan, than there should be some financing options for you. Basically, the higher your credit score is the more options that are available to you. (Another way to bump that credit score up would be to take a credit card and making small purchases (like gas, etc.) and continue to make those payments on time.)
Your income level should be fine for your proposed purchase price, however, most if not all lenders are going to take into account the amount of money you have to put down on the house. The more money you have to put down on the house, the better interest rate you should receive. I would personally recommend a down payment of at least 10% or higher. You may be able to obtain a loan for less money down, but the rate will be much higher.
And as always, shop around to a few different mortgage companies and make sure to request a good faith estimate. This way you can compare the rates and fees from the different companies and choose the best one.
Hi, I am just wondering, is it right for a bank to tell you get a credit card to help improve your credit score? I am in the process of trying to get approved for a home loan for low income in IL and my credit score is 620 now. I have had bad experence with credit cards, and am afraid to get another one. Is there another way to improve credit score with out credit cards? I am paying my bills on time...for the last 4 to 6 months. I am a cash person with checking and savings accounts.
Penny - IllinoisObtaining a credit card and paying the balance in a timely manner is one way to begin to rebuild your FICO (credit) score. The bank may be making this suggestion to build or rebuild your credit in a quick manner.
However, there are several factors that are used to calculate your FICO score. Your payment history makes up about 35% of that score. Unfortunately, negative items and late payments affect your credit rating much faster than positive items. Paying your bills on time is a great start and will significantly improve your credit score, but it will take some time. Four to six months of making all payments on time is a great start! However, it may take 6 to 8 more for you to really see a significant improvement. You may want to order a copy of your credit report and check it for any errors it may have on it. It is very important to correct any false information as this may affect your rating dramatically. Most states allow you to obtain a copy of your credit report for free annually – check out annualcreditreport.com. You can also contact the three major credit bureaus directly (TransUnion, Experian, EquiFax) for a copy of your credit report and to get their suggestions. It is important to remember that each inquiry to your credit history will slightly lower your FICO score. However, checking your own credit history will not be reported negatively.
I own a vacation house...which is worth $350,000. Its free and clear. I am remodeling the property and adding a bathroom and 2 bedrooms in the lower level. I am looking at a loan of $30,000 approx. Is there a product available?
Tom - West VirginiaWith the dollar amount you are looking to borrow, you best bet would appear to be to take out a Home Equity Loan or Home Equity Line of Credit where you only pay interest on the monies you use. Home Equity rates are very similar to Conventional Fixed Mortgage Rates right now so that would probably make the most sense. Shop around your local banks and see which one has the best program to fit you needs.